China Bank raises P15 billion from bonds

MANILA, Philippines — China Banking Corp. raised P15 billion as investors swarmed its bond offering, prompting the bank to end the fundraising activity ahead of schedule.

China Bank president William Whang said the bond offer period was closed on Oct. 5, ahead of the original Oct. 14 schedule, due to overwhelming demand.

“The overwhelming demand speaks of the investing public’s trust and confidence not only in the bank but also in the capital markets in these challenging times,” Whang said.

Within a few days since the offer period started on Sept. 28, the orders for the two-year bonds with a fixed rate of 2.75 percent per annum already exceeded the issue size of P15 billion. The bonds will be listed on the Philippine Dealing & Exchange Corp. on Oct. 22.

“We are grateful for the strong investor support for our second peso bond issuance,” Whang said.

The bank will use the proceeds of the fundraising activity to support its strategic initiatives and expansion programs.

China Bank established a P75-billion bond program in April last year to give it more options to raise funds and reduce reliance on deposits. Of the total amount, it successfully raised P30 billion via its maiden fixed-rate bond offering in July last year.

The bank, controlled by the SM Group, is also planning to raise up to P20 billion via the issuance of long-term negotiable certificates of deposits (LTNCDs) to support asset generation and expansion.

In the first semester this year, China Bank’s earnings went up by 24 percent to P5.2 billion in from P4.2 billion in the same period last year despite a higher provision for bad loans in anticipation of higher defaults due to the pandemic.

The bank allotted P4.8 billion for loan loss provisioning, more than 14 times last year’s amount, in anticipation of the impact of COVID-19 and ongoing quarantine measures on asset quality.